Correlation Between Aptiv PLC and CDW Corp
Can any of the company-specific risk be diversified away by investing in both Aptiv PLC and CDW Corp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Aptiv PLC and CDW Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aptiv PLC and CDW Corp, you can compare the effects of market volatilities on Aptiv PLC and CDW Corp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Aptiv PLC with a short position of CDW Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aptiv PLC and CDW Corp.
Diversification Opportunities for Aptiv PLC and CDW Corp
Almost no diversification
The 3 months correlation between Aptiv and CDW is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Aptiv PLC and CDW Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDW Corp and Aptiv PLC is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Aptiv PLC are associated (or correlated) with CDW Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDW Corp has no effect on the direction of Aptiv PLC i.e., Aptiv PLC and CDW Corp go up and down completely randomly.
Pair Corralation between Aptiv PLC and CDW Corp
Given the investment horizon of 90 days Aptiv PLC is expected to under-perform the CDW Corp. In addition to that, Aptiv PLC is 1.4 times more volatile than CDW Corp. It trades about -0.11 of its total potential returns per unit of risk. CDW Corp is currently generating about -0.15 per unit of volatility. If you would invest 21,691 in CDW Corp on September 3, 2024 and sell it today you would lose (4,098) from holding CDW Corp or give up 18.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aptiv PLC vs. CDW Corp
Performance |
| Timeline |
| Aptiv PLC |
| CDW Corp |
Aptiv PLC and CDW Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aptiv PLC and CDW Corp
The main advantage of trading using opposite Aptiv PLC and CDW Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aptiv PLC position performs unexpectedly, CDW Corp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CDW Corp will offset losses from the drop in CDW Corp's long position.| Aptiv PLC vs. Allison Transmission Holdings | Aptiv PLC vs. LKQ Corporation | Aptiv PLC vs. Lear Corporation | Aptiv PLC vs. Magna International |
| CDW Corp vs. CACI International | CDW Corp vs. Jack Henry Associates | CDW Corp vs. Broadridge Financial Solutions | CDW Corp vs. ExlService Holdings |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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